HP falls on lowered outlook, business overhaul

BANGALORE (Reuters) - Shares of Hewlett-Packard <HPQ.N> slid 11 percent premarket on Friday, a day after the world's biggest PC maker said it may spin off the business, and cut its outlook, signaling a massive overhaul in the wake of bleak tech spending across the board.

The company, which for years represented everything Silicon Valley, has been struggling with its once hugely popular PC business, with niftier gadgets like Apple's <AAPL.O> iPad eating into market share.

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It also stopped production of its WebOS-based tablet product, which failed to find favor with buyers, and said it will buy British software company Autonomy Corp <AUTN.L> to boost its cloud business.

"We are directionally positive on the shift to high-growth, high-margin business but this transformation is proving expensive, protracted and includes significant integration risk," Robert W. Baird said in a research note.

The brokerage downgraded HP's stock to "neutral" from "outperform," cut its price target to $30 from $51, and said HP is no longer a "safe haven" stock.